Posted this over on the relationship and money board but didn't get many responses.....thought maybe some people on the rebuilders thread could offer some input.
My bf and I moved in together this year, and we plan on getting married one day. Our finances are completely separate and will remain so until we get married. We are both in our late twenties and I guess you could say we are at two different places financially. I've got a good job that I've been at for a few years and since then I've taken steps to reduce my own debt and develop a healthy credit history. My bf on the other hand isn't really happy with his job and is planning on going back to school. Like myself he's made some credit mistakes when he was younger but with the pay at his current job, unlike me, he hasn't had the money to be able to try and pay/settle some of those blemishes that remain on his credit report. He has student loans reporting and a car loan, but no open credit card on his account. So I've decided to add him on to two of my accounts as an authorized user so that he has some open credit card accounts with good history on his report. I know this will help his score, but is it sufficient enough that at some point he will be able to open an account in his own name? Do creditors look at authorized user accounts on your report differently than if the account was solely yours? Or should he also get a secured credit card account in his name?
Obviously I know getting the negative stuff off will help quite a bit, which I've been helping him try to work on....but want to try to maximize the amount of positive stuff he can do now as well to try to get the best results.
AUs are usually treated the same. Some lenders will take issue if you are 100% reliant upon them. Per FICO, they (AUs and individual or joint ownership) are treated equally.
If I had to advise him, I'd tell him not to apply for any credit. I'd tell him no to credit if he's not planning to work full-time. Without an income and a means to pay the bills, I'd tell him to go cash-only for the time being, or until he starts working again. I'd even go further and tell him to reserve the savings he has to take care of his car and SLs as opposed to using it for past debts. There's no need to focus on repair if he isn't applying for anything. You'd also want to have cash on hand for any emergency fund and to have savings set aside if he were to be sued for any past debt still inside SOL.
I definitely told him not to apply for anything for awhile until he has a chance to work on his current issues, and hopefully being an authorized user on some of my accounts with higher limits once he's in a good financial position where he wants to get his own card hopefully he can get something better than say first premier or credit one.
He didn't have much credit to begin with so I think it's really only one credit card that the creditor closed, and then I believe a few unpaid medical bills. He's been doing a bit of traveling or work reasons, so I think that's where the feeling comes from that he needs at least one credit card for things like car rentals, hotels, etc.; so I think putting him on mine solves those issues. I think the biggest reason he has been adamant about trying to improve his credit is once we're married he doesn't want to be the reason that say we can't qualify for the best rate on a mortgage or a car loan, or feel like he's skimping on an engagement ring because if he doesn't have whatever he wants to spend on hand in cash and he can't qualify for financing....which are all admirable reasons, but I just feel like he thinks there is a magical cure to turn it around quickly. I've tried to reiterate that the best thing for your credit is time.....but just want to make sure that I'm suggesting all the right things to see consistent improvements in his credit score overtime.
I think getting the secured card is a good idea so that its building history now while his credit is not the best, so that its not starting at ground zero with new accounts once his score improves.